Monthly Archives: Thursday December 2nd, 2010

Moldova: “Must… destroy… capitalism…”

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The Moldovan Communists, from that little post-Soviet Republic squeezed between Romania and Ukraine, recently won a solid plurality (40%) of the seats in their last parliamentary elections. It’s not clear what’s really Communist about them, but the EU (embodied in the Swedish and Polish foreign ministers) have been over in Chisinau (the capital) to block their formation of a government. Apparently the Communists are “pro-Russian” whereas the other parties are “pro-European”. All the recent Russo-European, Russo-American and even Russo-Polish reconciliation has evidently not been enough to temper some old reflexes.

Helmut Schmidt on (Lack of) Leadership

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Last June, Helmut Schmidt – the chain-smoking almost 92-year-old former Chancellor of (then West) Germany in the 1970s – reminded everyone he was still alive by chastising European national leaders for choosing “Mr Nobody” and “Mrs Nobody” to implement the much-awaited Lisbon Treaty and boldly lead the Union into the 21st Century.

He recently gave another interview where he criticizes near everything and everyone in Europe, and in particular, a German political class he considers skittish and short-sighted. He begins, saying that ”the present German government is composed of people who are learning their business on the job. They have no previous experience in world political affairs or in world economic affairs.” As for the dour officials at the Bundesbank, “[i]n their innermost heart they are reactionaries. They are against European integration.” More generally, German leaders “tend to act and react too much under the aspect of national interests and haven’t understood the strategic necessity of European integration.”

In addition, he bemoans the lack of visible leaders in European institutions as well, repeating the jibes at the European Council President and the High Representative for Foreign Affairs and Security Policy:

We have seen this complex Lisbon treaty, many things have happened and at the same time figures who could lead have become scarce. One very important figure was Jacques Delors. He has been replaced by people whose name one doesn’t really know. And the same goes for permanent secretaries and the chairmen of various commissions and for prime ministers and – what is his name – van Rompuy? And he has a so-called foreign secretary – a British lady, her name is not necessary to know either. The same goes, more or less, for the European Parliament. The only figure who sticks out in the European institutions is [Jean-Claude] Trichet. I’m not sure how strong he is inside the European Central Bank, but as far as I can see, he hasn’t made a major mistake so far.

I have a feeling this has more to do with time, place and the power of a position than the personalities themselves. Trichet and Delors, after all, started out about as colorless as a Barroso or a Van Rompuy. The difference, it seems to me, is the former two had important jobs – the one creating the Single Market and the Euro in the momentous years that were the end of the the Cold War, the other setting policy for a currency area second only to the U.S. economy in importance – while the latter two are mere “occupants”. The peoples of Europe cannot give them a mandate, the States have not given them one, so they manage rather than lead. Although WikiLeaks has also revealed the penchant to use Brussels to exile “lame duck” political colleagues, in this case Merkel’s choice of Gunther Oettinger as Energy Commissioner.

He predicts 51% chance of a “core Union” being formed with France, Germany and the Benelux countries, probably not many others, with perhaps even a common foreign policy. I’m rather skeptical, but Europe “à la carte” has been a reality for some time, with States picking and choosing what they want to be a part of, from membership of the Eurozone to the Schengen area. This trend is continuing. Just recently 11 States, refusing to be stalled by the others, are moving ahead to create a common European patent.

As to the British attitude towards Europe – and America – he answers that

Fundamentally I think de Gaulle was right [...] I used to believe in British common sense and state rationale… I was brought up in a very Anglophile way. I was a great supporter of Edward Heath who brought Britain into the European community. But then we had Harold Wilson and Margaret Thatcher, who didn’t always behave so sensibly. And then we had Tony Blair who brought himself into a position of far too great a dependence on America. You can’t have this dependence on America and at the same time play a responsible role in Europe. The British have always been good, though, at muddling through – and this is what we are doing now in Europe, muddling through.

I have a very similar feeling. There was a time when British Statesmen thought of themselves as Europeans. I am thinking here in particular of the Tories, who once upon a time, would take pride in cultivating their French and embraced a “One-Nation” conservatism quite close to Continental Christian Democratic tradition. No nonsense about society “not existing” or the demonization of government. Since then the Thatcher-Blair line has triumphed, involving total identification with whoever happens to be occupying the White House, without it ever being particularly obvious what benefits this brings to Britons. Reagan and Bush assiduously ignored Thatcher’s concerns – whether on Grenada, the Falklands or German reunification – while Blair has nothing to show from his relationship with Bush than a ruined personal legacy and lots of body bags.

A lot of rather grey prospects then. Also see Charlie Rose’s time-capsule interview with Schmidt from 1999. He discusses, in flawless English, German reunification, the Euro, forecasts (relatively accurate too) and so on. There’s a few quaintly retro elements, Schmidt can’t resist smoking inside the studio and Rose asks questions like “Do you know what Amazon dot com is? It’s an internet company that sells lots of books, lots of books.”

On the Democratic Deficit: European Commission tells Greenpeace to Sod Off, Socialists to pick candidate for 2014

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The folks at Greenpeace can never be accused of a lack of voluntarism. The Lisbon Treaty, in one of its mostly weak attempts to improve democratic legitimacy, created provisions for a citizens’ petition: if 1 million signatures from around Europe for a given cause, then European Commission must take it into consideration and formally response. Sure enough, Greenpeace got those signatures very quickly for a ban on Genetically-Modified Organisms, mostly grown in the Americas. Such a petition cannot force the Commission to do anything beside “respond,” which could easily be a formal letter to activists telling them to sod off.

The Commission decided that even this would be too great a concession. Though the Lisbon treaty has been in force for over a year, the precise technical provisions for a legitimate petition have not been established (e.g., from how many Member-States the signatures should be from, with what minimum threshold..). As a result, the Commission has deemed the Greenpeace petition void. Our good save-the-Earthers have been told to start again from scratch.

EU politics remains largely impervious to popular participation or even actual partisanship. The Commission maintains the aura of a technocracy (although it is actually too underfunded and understaffed to have real expertise in many areas, relying on national and corporate officials) while the dealings of the Council remain more in the realm of diplomacy than of politics. Only the Parliament is slightly better, but its colorful assortment of radicals (postcommunists, Greens, big-C conservatives and secessionists) are largely overshadowed by the gray consensus politics of the big political groups, composed in large part of nameless hacks and semi-retired politicians.

It is hard to engage the public when having an actual political debate has been made structurally impossible. I think this is not an oversight but a feature of the European political system, the national politicians who created it being just as eager to insulate themselves from popular pressures as were America’s Founding Fathers. These sorts of petitions, while they can be dangerous, represent one of the few outlets for democratic participation.

I am more enthusiastic about the proposal of the Socialists to nominate a candidate for President of the Commission whom they would elect if they win the 2014 parliamentary elections. The leader of our Union, then, would actually have to campaign and be elected with a platform. Oh my, what a strange concept. I’m sure we all preferred waiting for the White Smoke so that European diplomats and politicians could emerge from a caffeine-fueled late-night negotiations to solemnly declare which uncharismatic non-entity they collectively found least disagreeable.

The Socialists’ platform incidentally includes a tax on financial transactions, a commitment not to cooperate with neofascists and the creation of a “Employment and Social Progress Pact” to counter the European Central Bank’s deflationary stability pact. Whether or not they are good ideas, they at least form the basis of a project which, for or against, would legitimately give European citizens a reason to turn out in 2014. In the absence of any discernible projects or actual intelligible politics, the continuous decline in turn for European elections has been an inevitable product of the system.

Don’t get your hopes up though. The Socialists’ potential candidacy so far has attracted little attention, whether from media or even national politicians, and they previously failed to settle on a candidate in 2009. Who could be the candidate? I don’t know enough about the center-left politics in other countries to really say. But someone over-ambitious, a “big politician” of international stature, preferably speaking French, German, English and – why not – Italian, would be nice.

World Economic Forum: “Socialism Is Competitive”

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OK, so they didn’t say that. It would be like The Economist conceding that the French economy, dirigisme and all, performs about the same (or better) as any other major European economy with the exception of Germany. However, I was struck that the WEF has published its annual “Global Competitiveness Report” where economic success is completely independent of the degree of Statism/welfarism. This is significant because the WEF is supposed to be the sort of ultracapitalist/neoliberal institution that leads assorted hippies, leftists and other “altermundializers” to organize counter-summits.

The report includes a ranking which features in its top-10 Switzerland, the United States of America and Singapore. Otherwise, the top-10 is dominated by the most Social-Democratic states in the world including Sweden, Finland, and Denmark, as well as Germany, the Netherlands and Canada. The varieties and varying degrees of welfarism, Statism and egalitarianism in these countries are no contradiction to what the report defines as “competitiveness,” or “the set of institutions, policies, and factors that determine the level of productivity of a country.” The “six pillars” include: institutions, infrastructure, health, primary and higher education, the macroeconomic environment and market efficiency.

I don’t have much hope that even a capitalist authority like the WEF will be able to give the lie to the usual neoliberal suspects – The Economist, The Wall Street Journal, self-proclaimed conservatives generally – that there is no automatic trade-off between social democracy and economic success. No number of foreign counter-examples ever really registers.

Rather, if the economy is to prosper, taxes (preferably on rich people) must be lowered, education and health (and everything else) must be privatized, welfare and pensions must be cut and, more generally, even things quite essential to daily life should only go to those defined as “deserving” (e.g. rationed by wealth). These ideas, however simple, resonate and formed the basis of the electoral success of Nicolas Sarkozy and a number of Nativist/anti-tax/independence movements in Europe including Belgium’s Vlaams Belang and Italy’s Lega Nord. I don’t think we’ve seen the end of it..

Fine print: I am generally skeptical of these crude rankings, especially when it involves reducing to a single variable something as complex/nebulous as “Freedom,” a university’s goodness or indeed “competitiveness”.  While they give you some information, it is often merely a matter of giving an aura of authoritativeness to pseudo-scientific measurements. Sometimes they are politically driven.

Very fine print: Also, the report was apparently elaborated by a Spanish man in fluorescent green suit, whom I think we can all agree is obviously untrustworthy.

“Homeopathic Economics”: Thoughts on the new E.U./U.S. economic figures and the Eurozone crisis

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There’s been so much economic news recently it’s been hard to keep track of what going on, particularly because of the intense focus of catastrophic cases like Ireland and Greece. In order to help order my own thoughts, in this post I’ve compile most of the recent growth, unemployment, inflation and deficit figures across in the United States of America and the European Union, including between countries. I don’t think the current, basically Germano-centric, situation is sustainable and I briefly look at recent pushes for a change away from deflationary policies and possibly towards further integration.

Comparable Performance in Europe and the U.S.

The performance of the two economic giants has been comparable, especially if one takes into account the effect US demographic growth on GDP (and thereby a growing labor force and more slowly growing pensioner-worker ratio), which is almost 1% for Americans but only 0.1% for Europeans. The European Commission’s estimates on  growth rates for 2010 the EU have doubled from 0.8% in May to 1.8%. Circa 2% growth is also expected 2011 and 2012. In contrast, the US Federal Reserve has revised down its growth projections by about half a point to 2.6-3.1% for 2011.

The Commission predicts the unemployment rate will be shaved by a measly 0.5% over the next two years, from 9.6% to 9.1% across the EU. It pithily forecasts a “rather jobless recovery and potentially persistent high unemployment” . Similarly, the Americans have seen the unemployment rate continue to increase, despite the formal end of the recession, to 9.8%. Average EU inflation is well under control at 2%, expected to drop to 1.75% next year while the US’s figure has also recently been revised down.

Europe’s Lower Deficits and the Overvalued Euro

For me, it’s quite amazing that even tepid growth in Europe has been possible despite the contrasting fiscal and monetary situations. While American officials have been scolding the Chinese for the unfair undervaluing of the Yuan, the Euro remains horrendously overvalued, hovering around $1.3-4, even bouncing back up to $1.34 today. In addition, European deficits are much lower. The average for EU members is expected to decline from around 6.8% in 2010 to 4.2% in 2012. In the US, the deficit was a record $1.416 trillion in 2009 (12.3%) of GDP, down to about $1.3 trillion this year. Given the continued wars, aversion to taxes and the renewed round of quantitative easing, this is unlikely to go away any time soon. No solution will come from flaccidly symbolic Liberal posing and compromise otherwise seems impossible.

Given this, and historically low inflation, Europeans have not used all the tools at their disposal to fight stagnation and unemployment. I don’t know how European industry is supposed to compete with with American exports – let alone Chinese – given the current exchange rates. The Commission’s press release, in its way, also points to austerity and the phasing out of Keynesian policies as reasons for the shaky situation: ”Overall conditions are set to remain weak though, reflecting, inter alia (!), the unwinding of policy measures taken in response to the recession and ongoing structural adjustment, not least in the public sector.”

Regional Disparities and Political Implications

Finding renewed growth – particularly in the peripheral countries – is a political necessity. The Commission calls the recovery ”gradual and uneven,” as good a euphemism as any for massive regional disparity. Interestingly, and against the simple orthodoxies of free market ideologues, performance across the EU has been largely independent of the degree of Statism/Welfarism. Flat-taxed Estonia and Slovakia have the best growth rates with about 3-4% over the 2010-2012 period. At the same time, the next fastest growing countries are Welfare-Statist Finland and Sweden at 2-3% over the same time, with Sweden achieving a whopping 4.8% this year. The worst cases, Greece and Ireland, are in some ways mirror images, the one suffering from crony welfarism and military Keynesianism (encouraged by France and Germany), the other, with its low corporate tax and lax financial regulation, a former neoliberal “star pupil” now fallen to crony capitalism.

The trouble, it appears, is with Germany. It has had very solid growth of 3.7% this year, expected to hovering around 2% for the next two. Too high exports to the rest of Europe and a domestic demand increase so low that one economist describes it as “homeopathic”. Our current fiscal and monetary policies appear driven by decidedly traditional “West German” priorities, namely, to fight inflation regardless of just about everything else, including growth, exports, employment or the increasingly desperate situation of peripheral nations locked into the Euro. This can be quite dangerous for the Union. A country like Spain can’t run around with 20% unemployment (and rising) without this leading to negative sentiment towards their overvalued and near-deflating currency.

Prospects

These problems repeat similar ones in the 1980s over West Germany’s monetary policies, featuring notably an unequal conflict between Paris and Bonn. French discontent over this was one of the reasons for pushing for Monetary Union but it seems that has only shifted the seat of the problem from Frankfurt’s Bundesbank to Frankfurt’s European Central Bank without actually changing policy.

For all the flaws in the Euro’s creation however, in a sense the unsustainable situation we are now living in was intentional: a contradiction was created which, according to the European ideology, will need further integration to resolve. And, sure enough, last week in a meeting with the European Parliament’s economic and monetary affairs committee, the usually dour ECB head Jean-Claude Trichet called for no less than a “quasi-federation of budgets” in response to the Eurozone’s troubles. He said:

We have got a monetary federation. We need quasi-budget federation as well. [...] We could achieve that if there is strong monitoring and supervision of what there is. Because what exists doesn’t correspond with the actual situation that we are facing. It is a situation where we need quasi-federation of the budget.

What this would mean in practice is not entirely clear. It could mean the option of imposing austerity through institutions. Germany’ skepticism might suggest otherwise however. In addition, WikiLeaks has revealed that the governor of the Bank of England has genuinely feared the prospect a genuinely feared a political union of the Eurozone because of the crisis. Integration without Britain, of course, has always been the old nightmare, where lasting institutions are created without British interests being taken into account (historically, the Common Agricultural Policy and the humiliation of British exclusion from the Single market).

I don’t know if any last institutional change will come from the current crisis. It is easier to move forward with just the Eurozone (“multi-tier integration,” etc.) but no one wants a replay of the Constitutional or Lisbon Treaties. At the same time, without a significant change of policy (whether or not through institutional reform), Europe’s economic and the Union’s cohesion are going to continue to suffer greatly.

France’s Man in Baghdad Plays James Bond

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I was very tempted to entitle this post “Sarkozy’s Little Arabs” for two guests that appeared at the same time on the popular French talk show Le Grande Journal. The first was Amine Benalia-Brouch, a Frenchman of Algerian-Portuguese heritage. A member of Sarkozy’s political party the UMP, he achieved minor fame when at a party event a fellow member said “He’s our little Arab,” to which Minister of the Interior Brice Hortefeux responded “All the better. You always need one. When there’s one, it’s OK. It’s when there are lots that there are problems.” Benalia-Brouch initially issued a video defending Hortefeux’s comments (out of context, etc). Later he reneged, left Sarkozy’s party, claimed to be under pressure (vague threats regarding the Interior Ministry) and is now peddling a book on his experience. Ho-hum… Hortefeux was eventually found guilty in court of “racial insults” but did not have to resign from his ministry.

The second is Boris Boillon, France’s man in Baghdad. Le Grand Journal presents extracts from a documentary entitled “Ambassadeur de choc” (apparently not a contradiction in terms, sadly I can’t find the full video). In the doc, we indeed witness scenes of an ambassador “between James Bond and Rambo”:

  • Boillon closing off the fortress-like French Embassy in “the most dangerous country in the world,” guarded by 30 gendarmes and elite GIGN.
  • Boillon being credited with freeing the Bulgarian nurses in Libya in 2007.
  • Boillon wielding an assault rifle in case, in his words, “of a force majeure“.
  • Boillon speaking in Arabic in front of the cameras, the documentary informing us he was raised in Algeria and is a star with Iraqi media.
  • Boillon doing pull-ups and jogging, 45 minutes of which for him is ”simply vital”.

On the show itself, the handsome – if almost a little too baby-faced for 40 – Boillon seemed a bit star-struck. His talking points and bons mots initially came out a little awkwardly. He soon found his stride though expounding on French businesses helping Iraq rebuild, on the fact that the French and American presences are complementary not competitive, or on France’s reputation for scientific excellence in the country (perhaps due to historic sales of nuclear power stations and Mirage fighters in the 1970s and 1980s, inevitably to be later destroyed by the Israelis and/or American-led coalitions).

He calls himself ”a pure Sarko product” who shares the Great Leader’s qualities, which he defines as “energy” and “the ability to see things as half full”. Indeed, when asked about Iraq’s rough shape and France’s relatively minor role, he responded (presumably memorized) that  ”the bigger the field, the bigger the field of possibilities.” He also has Sarkozy’s goofy habit, which the President has since given up, of wearing sunglasses all year round, including indoors (“the trademark of the Elysée,” Boillon says).

The air of confident suaveness and elegant gravitas does seem rather put on and was greatly undermined when he was asked whether Sarkozy’s nickname for him really was “my little Arab”. Boillon responded that yes, “among other things, but it’s just affectionate.”

All this, while perfectly interesting, is very strange. It’s not normal for ambassadors to be portrayed as a real-life supermen. Nor is there usually any reason for a French ambassador to spend time appearing on French television or radio. But then, he is one of those ”young wolves” plucked by Sarkozy and put into positions of responsibility ahead of the normal rules of promotion. The “foundation” of his position is thus fundamentally different, disregarding seniority and the esteem of his diplomatic peers, more dependent on Sarkozy’s whims and fortune, and, perhaps, a wider notoriety. Is Sarkozy’s “little Arab” being prepared for another role through these appearances? Perhaps, but Boillon should be careful. Sarkozy’s other idiosyncratic media-friendly picks – Kouchner, Dati, Amara.. – haven’t always faired well.

Other stuff:

  • Boillon appearing before the Sénat. Not a particularly good public speaker here, mainly deals with his role as ambassador for French big business (AirFrance, Total, Lafarge…) and the limited risks of doing business in Iraq, but also on creating rule of law, etc.
  • Boillon appearing on the RTL radio station, much more effective. Arguing for greater involvement in the vast, terroristic so-called “arc of crisis” from Af-Pak to the Sahel (!), praising a genuine U.S. withdrawal from Iraq (sounding like an U.S. government spokesperson in fact..), describing the first big reception at the French embassy celebrating July 14th (“Bastille Day”) since 1990 with some700 guests.

The WSJ on Eurocratese

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John Miller over at Real Time Brussels has a funny little post on the popularity of Latin and old-fashioned English phrases in the Eurocrat’s vocabulary. Inter alia is apparently extremely popular in official documents but my favorite has to be the rather less used “proof of the pudding is in the eating.” As the post notes, you have to imagine our 40something Eurocrats learning English thirty years ago, perhaps from dusty old British textbooks or maybe from non-native speakers who might not realize how quaint an expression might be.

Not that idiomatic expressions are a bad thing. Inevitably when everyone is speaking a second language, or going through an interpreter, all these lively phrases – often linked to cultural references, historical events or sporting traditions – tend to be completely absent. The result can be excruciatingly dry.

Cablegate I: Wish It Happened Two Years Ago

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With his acquisition of 250,000 diplomatic documents and cables, Julian Assange has shown us we have entered into a new age of human interaction. It isn’t that the documents themselves are remarkable. Rather, as Facebook has proven a radical challenge to traditional notions of an individual’s privacy, so WikiLeaks is hammering away at the very idea – and more to the point, the feasibility – of the secret d’Etat.

For my part, it would have been nice if Julian Assange had been busier between 2006 and 2009 when I was busy writing history dissertations. Our professors were always keen to explain how truth on a given matter most assuredly needed, among other things, access to the Archives. There, diplomatic cables were kept, minutes from the most senior meetings gathered dust, and “top secret” documents lay in wait… Only after having consulted these holies could you have something to say about the decision of Prime Minister so and so to do X or Z.

No longer. With the ease of access to information today – though WikiLeaks among other things – a contemporary history becomes possible. And instead of Mitterrand or the Indochina War, I might have written on Franco-American relations from Chirac’s obession with Lebanon to Sarkozy’s mulling sending French troops to Iraq.. The immediacy of political science and the empirical data of history are quite an attractive combination!

I don’t consider the revelations necessarily to be a great danger for humanity or even American diplomacy. Ultimately, absolute transparency would considerably reduce the risk of conflicts due to uncertainties. The only wars that would occur would be those driven by malice rather than misunderstanding. There would be no legitimate wars of preemption. On that note, the Iraq War might not have been possible had WikiLeaks existed in late 2002. Of course, chancelleries may get better at hiding their information, and it will do no good if only the Americans are paraded naked. We will have to see similar things from Europeans, Russians, Iranians and Chinese. This is not necessarily as impossible as it seems. All you need is a USB key and one disaffected official for the floodgates to be opened..

The media is still picking apart the mass of documentation. Naturally much has focused on mostly unremarkable gossip about world leaders: Sarkozy is a hyper-sensitive jerk, Berlusconi’s playboy antics infringe on his ability to govern, Kim Jong-il is strange, Putin is manly whereas Medvedev is meek… In short, American diplomats have described foreign leaders in much the same way as traditional media described them.

However, there’s been lots of other information too, and lots of it relevant to Europeans. I’ll be discussing them in the coming days as part of a little “Cablegate” series. Stay tuned..